Financial Percentages and Current Ratio Dissertation


Based on the table 1, it shows that the financial proportion was broken into four parts which are liquidity, assets supervision, long-term debt paying ability and profitability. Liquidity proportions are particularly interesting to initial creditors in fact it is focus on current assets and current responsibility. In addition , General Thumb of rule intended for the current percentage should be at least two: 1 . Intended for the Gemini Electronic the current ratio is consistent in fact it is increase in season 2006. But we remember that Gemini Consumer electronics is somewhat less water than the common firm on the market because the current ratio is leaner than the industry average. Both equally fixed possessions turnover and total asset turnover are less than industry average, proving the fact that Gemini Gadgets is having a asset slowly, than the industry average in generating revenue. In term of collects receivable Gemini Electronics was becoming sluggish during yr 2009. Among the causes can be many retailers demanded even more generous credit rating terms than net 35, which normal in the industry. Besides that, fascination was as well not recharged on overdue account. Gemini Electronics' personal debt ratio and debt collateral ratio show that Gemini Electronics much more leveraged compared to the average organization in sector. The higher leverage in part points out Gemini Gadgets poor financial performance relative to the electronics industry since the leverage does Gemini Gadgets to rates of interest that must be paid regardless of economic and market conditions. The ratios indicate that Gemini Electronic contains a higher cost of sales than the average firm in the consumer electronics industry, making lower gross profit perimeter, and bigger indirect costs, resulting in decrease net income margin functionality relative to the electronics industry. When mentioning the Gemini Electronics instances the leverage was high because of every one of the assets had been financed with term financial loans. This is the elements of the leverage becoming high.